National Australia Bank (ASX:NAB) will exclude customers with student debts of AU$20,000 or less from home loan assessments, effective July 31, the bank said Thursday.

The change could increase borrowing power for NAB customers with higher education loan program (HELP) debt, helping them enter the property market sooner, the report said.

"For too long, HELP debt has been a roadblock for many Australians looking to buy a home," said Matt Dawson, NAB executive for home ownership.

Housing supply remains the biggest challenge, and addressing both demand and supply through widespread collaboration is essential to solving Australia's housing issues, Dawson added.

The bank's shares were up almost 1% in recent Thursday trade.